EN BANC

[G.R. No. 69870. November 29, 1988.]

NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L.

PEREZ , petitioners, vs. THE HONORABLE THIRD DIVISION, NATIONAL
LABOR RELATIONS COMMISSION, MINISTRY OF LABOR AND
EMPLOYMENT, MANILA AND EUGENIA C. CREDO , respondents.

[G.R. No. 70295.]

EUGENIA C. CREDO , petitioner, vs . NATIONAL LABOR RELATIONS

COMMISSION, NATIONAL SERVICES CORPORATION AND ARTURO L.
PEREZ , respondents.

The Chief Legal Counsel for respondents NASECO and Arturo L. Perez.
Melchor R. Flores for petitioner Eugenia C. Credo.

SYLLABUS

1. LABOR LAW AND SOCIAL LEGISLATIONS; LABOR CODE; DISMISSAL; NOTICE

OF DISMISSAL TO EMPLOYEES BEFORE TERMINATION REQUIRED. — The guidelines
provided in Rule XIV, Book V, Implementing Rules and Regulations, particularly Sections
2, 5 and 6 mandate that the employer furnish an employee sought to be dismissed two
(2) written notices of dismissal before a termination of employment can be legally
effected. These are the notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought and the subsequent notice which informs
the employee of the employer's decision to dismiss him.
2. ID.; ID.; ID.; DECISION TO DISMISS MAY ONLY BE ISSUED AFTER EMPLOYEES
WAS AFFORDED DUE PROCESS. — A reading of the guidelines in consonance with the
express provisions of law on protection to labor (which encompasses the right to
security of tenure) and the broader dictates of procedural due process necessarily
mandate that notice of the employer's decision to dismiss an employee, with reasons
therefor, can only be issued after the employer has afforded the employee concerned
ample opportunity to be heard and to defend himself.
3. ID.; ID.; ID.; SEVERE PENALTY OF DISMISSAL NOT WARRANTED IN CASE AT
BAR. — Besides, Credo's mere non-compliance with Lloren's memorandum regarding
the entry procedures in the company's Statement of Billings Adjustment did not
warrant the severe penalty of dismissal. As this Court has ruled: ". . . where a penalty
less punitive would suffice, whatever missteps may be committed by labor ought not to
be visited with a consequence so severe. It is not only because of the law's concern for
the workingman. There is, in addition, his family to consider. Unemployment brings
untold hardships and sorrows on those dependent on the wage-earner."
4. ID.; ID.; ID.; REINSTATEMENT AND BACKWAGES, PROPER IN CASE OF
UNJUSTIFIED DISMISSAL. — Considering that the acts or omissions for which Credo's
employment was sought to be legally terminated were insu ciently proved, as to
justify dismissal, reinstatement is proper for "absent the reason which gave rise to [the
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 employee's] separation from employment, there is no intention on the part of the
employer to dismiss the employee concerned." And, as a result of having been
wrongfully dismissed, Credo is entitled to three (3) years of backwages without
deduction and qualification.
5. ID.; ID.; ID.; EXEMPLARY DAMAGES AWARDED IF DISMISSAL WAS EFFECTED
IN A WANTON, FRAUDULENT, OPPRESSIVE OR MALEVOLENT MANNER. — While
Credo's dismissal was effected without procedural fairness, an award of exemplary
damages in her favor can only be justi ed if her dismissal was effected in a wanton,
fraudulent, oppressive or malevolent manner.
6. ID.; ID.; ID.; MORAL DAMAGES AWARDED AS DISMISSAL WAS EFFECTED
WITHOUT DUE PROCESS. — In view of the attendant circumstances in the case, i.e., lack
of due process in effecting her dismissal, it is reasonable to award her moral damages.
7. ID.; ID.; ID.; ATTORNEY'S FEES AWARDED AS EMPLOYEE WAS COMPELLED TO
LITIGATE. — For having been compelled to litigate because of the unlawful actuations
of NASECO, a reasonable award for attorney's fees in her favor is in order.
8. ID.; ID.; ID.; RULING IN NATIONAL HOUSING CORPORATION VS. JUCO, NOT
GIVEN RETROACTIVE EFFECT. — It would appear that, in the interest of justice, the
holding in said case should not be given retroactive effect, that is, to cases that arose
before its promulgation on 17 January 1985. To do otherwise would be oppressive to
Credo and other employees similarly situated, because under the same 1973
Constitution but prior to the ruling in National Housing Corporation vs. Juco, this Court
had recognized the applicability of the Labor Code to, and the authority of the NLRC to
exercise jurisdiction over, disputes involving terms and conditions of employment in
government-owned or controlled corporations, among them, the National Service
Corporation (NASECO).
9. CONSTITUTIONAL LAW; CIVIL SERVICE; SUBSIDIARIES OF GOVERNMENT
OWNED OR CONTROLLED CORPORATION NOT INCLUDED IN THE AMBIT OF CIVIL
SERVICE. — Thus, the situations sought to be avoided by the 1973 Constitution and
expressed by the Court in the National Housing Corporation case in the following
manner appear relegated to relative insigni cance by the 1987 Constitutional provision
that the Civil Service embraces government-owned or controlled corporations with
original charter; and, therefore, by clear implication, the Civil Service does not include
government-owned or controlled corporations which are organized as subsidiaries of
government-owned or controlled corporations under the general corporation law.

DECISION

PADILLA , J : p

Consolidated special civil actions for certiorari seeking to review the decision *
of the Third Division, National Labor Relations Commission in Case No. 11-4944-83
dated 28 November 1984 and its resolution dated 16 January 1985 denying motions
for reconsideration of said decision.
Eugenia C. Credo was an employee of the National Service Corporation
(NASECO), a domestic corporation which provides security guards as well as
messengerial, janitorial and other similar manpower services to the Philippine National
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 Bank (PNB) and its agencies. She was rst employed with NASECO as a lady guard on
18 July 1975. Through the years, she was promoted to Clerk Typist, then Personnel
Clerk until she became Chief of Property and Records, on 10 March 1980. 1
Sometime before 7 November 1983, Credo was administratively charged by
Sisinio S. Lloren, Manager of Finance and Special Project and Evaluation Department of
NASECO, stemming from her non-compliance with Lloren's memorandum, dated 11
October 1983, regarding certain entry procedures in the company's Statement of
Billings Adjustment. Said charges alleged that Credo "did not comply with Lloren's
instructions to place some corrections/additional remarks in the Statement of Billings
Adjustment; and when [Credo] was called by Lloren to his o ce — to explain further the
said instructions, [Credo] showed resentment and behaved in a scandalous manner by
shouting and uttering remarks of disrespect in the presence of her co-employees." 2
On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting
General Manager of NASECO, to explain her side before Perez and NASECO's
Committee on Personnel Affairs in connection with the administrative charges led
against her. After said meeting, on the same date, Credo was placed on "Forced Leave"
status for 15 days, effective 8 November 1983. 3
Before the expiration of said 15-day leave, or on 18 November 1983, Credo led
a complaint, docketed as Case No. 114944-83, with the Arbitration Branch, National
Capital Region, Ministry of Labor and Employment, Manila, against NASECO for placing
her on forced leave, without due process. 4
Likewise, while Credo was on forced leave, or on 22 November 1983, NASECO's
Committee on Personnel Affairs deliberated and evaluated a number of past acts of
misconduct or infractions attributed to her. 5 As a result of this deliberation, said
committee resolved:
"1. That, respondent [Credo] committed the following offenses in the Code
of Discipline, viz:

OFFENSE vs. Company Interest & Policies.

No. 3 — Any discourteous act to customer, o cer and employee of client

company or officer of the Corporation.

OFFENSE vs. Public Moral.

No. 7 — Exhibit marked discourtesy in the course of o cial duties or use of
profane or insulting language to any superior officer.
OFFENSE vs. Authority.

No. 3 — Failure to comply with any lawful order or any instructions of a

superior officer."
"2. That, Management has already given due consideration to respondent's
[Credo] scandalous actuations for several times in the past. Records also show
that she was reprimanded for some offense and did not question it. Management
at this juncture, has already met its maximum tolerance point so it has decided to
put an end to respondent's [Credo] being an undesirable employee." 6

The committee recommended Credo's termination, with forfeiture of benefits. 7

On 1 December 1983, Credo was called again to the o ce of Perez to be
informed that she was being charged with certain offenses. Notably, these offenses
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 were those which NASECO's Committee on Personnel Affairs already resolved, on 22
November 1983 to have been committed by Credo.
In Perez's o ce, and in the presence of NASECO's Committee on Personnel
Affairs, Credo was made to explain her side in connection with the charges led against
her; however, due to her failure to do so, 8 she was handed a Notice of Termination,
dated 24 November 1983, and made effective 1 December 1983. 9
Hence, on 6 December 1983, Credo led a supplemental complaint for illegal
dismissal in Case No. 11-4944-83, alleging absence of just or authorized cause for her
dismissal and lack of opportunity to be heard. 1 0
After both parties had submitted their respective position papers, a davits and
other documentary evidence in support of their claims and defenses, on 9 May 1984,
the labor arbiter rendered a decision: 1) dismissing Credo's complaint, and 2) directing
NASECO to pay Credo separation pay equivalent to one half month's pay for every year
of service. 1 1
Both parties appealed to respondent National Labor Relations Commission
(NLRC) which, on 28 November 1984, rendered a decision: 1) directing NASECO to
reinstate Credo to her former position, or substantially equivalent position, with six (6)
months' backwages and without loss of seniority rights and other privileges
appertaining thereto, and 2) dismissing Credo's claim for attorney's fees, moral and
exemplary damages. As a consequence, both parties led their respective motions for
reconsideration, 1 2 which the NLRC denied in a resolution of 16 January 1985. 1 3
Hence, the present recourse by both parties.
In G.R. No. 68970, petitioners challenge as grave abuse of discretion the
dispositive portion of the 28 November 1984 decision which ordered Credo's
reinstatement with backwages. 1 4 Petitioners contend that in arriving at said
questioned order, the NLRC acted with grave abuse of discretion in nding that: 1)
petitioners violated the requirements mandated by law on termination, 2) petitioners
failed in the burden of proving that the termination of Credo was for a valid or
authorized cause, 3) the alleged infractions committed by Credo were not proven or,
even if proved, could be considered to have been condoned by petitioners, and 4) the
termination of Credo was not for a valid or authorized cause. 1 5
On the other hand, in G.R. No. 70295, petitioner Credo challenges as grave abuse
of discretion the dispositive portion of the 28 November 1984 decision which
dismissed her claim for attorney's fees, moral and exemplary damages and limited her
right to backwages to only six (6) months. 1 6
As guidelines for employers in the exercise of their power to dismiss employees
for just causes, the law provides that:
"Section 2. Notice of dismissal. — Any employer who seeks to dismiss a
worker shall furnish him a written notice stating the particular acts or omission
constituting the grounds for his dismissal . . .
"Section 5. Answer and Hearing. — The worker may answer the allegations
stated against him in the notice of dismissal within a reasonable period from
receipt of such notice. The employer shall afford the worker ample opportunity to
be heard and to defend himself with the assistance of his representative, if he so
desires.
"Section 6. Decision to dismiss. — The employer shall immediately notify a
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 worker in writing of a decision to dismiss him stating clearly the reasons therefor."
17

These guidelines mandate that the employer furnish an employee sought to be

dismissed two (2) written notices of dismissal before a termination of employment can
be legally effected. These are the notice which apprises the employee of the particular
acts or omissions for which his dismissal is sought and the subsequent notice which
informs the employee of the employer's decision to dismiss him.
Likewise, a reading of the guidelines in consonance with the express provisions
of law on protection to labor 1 8 (which encompasses the right to security of tenure)
and the broader dictates of procedural due process necessarily mandate that notice of
the employer's decision to dismiss an employee, with reasons therefor, can only be
issued after the employer has afforded the employee concerned ample opportunity to
be heard and to defend himself.
In the case at bar, NASECO did not comply with these guidelines in effecting
Credo's dismissal. Although she was apprised and "given the chance to explain her
side" of the charges led against her, this chance was given so perfunctorily, thus
rendering illusory Credo's right to security of tenure. That Credo was not given ample
opportunity to be heard and to defend herself is evident from the fact that the
compliance with the injunction to apprise her of the charges led against her and to
afford her a chance to prepare for her defense was dispensed in only a day. This is not
effective compliance with the legal requirements aforementioned.
The fact also that the Notice of Termination of Credo's employment (or the
decision to dismiss her) was dated 24 November 1983 and made effective 1
December 1983 shows that NASECO was already bent on terminating her services
when she was informed on 1 December 1983 of the charges against her, and that any
hearing which NASECO thought of affording her after 24 November 1983 would merely
be pro forma or an exercise in futility.
Besides, Credo's mere non-compliance with Lloren's memorandum regarding the
entry procedures in the company's Statement of Billings Adjustment did not warrant
the severe penalty of dismissal. The NLRC correctly held that:
". . ., on the charge of gross discourtesy, the CPA found in its Report, dated
22 November 1983 that, 'In the process of her testimony/explanations she again
exhibited a conduct unbecoming in front of NASECO Officers and argued to Mr. S.
S. Lloren in a sarcastic and discourteous manner, notwithstanding, the fact that
she was inside the o ce of the Acctg. General Manager.' Let it be noted, however,
that the Report did not even describe how the so called 'conduct unbecoming' or
'discourteous manner' was done by complainant. Anent the 'sarcastic' argument
of complainant, the purported transcript 1 9 of the meeting held on 7 November
1983 does not indicate any sarcasm on the part of complainant. At the most,
complainant may have sounded insistent or emphatic about her work being more
complete than the work of Ms. de Castro, yet, the complaining o cer signed the
work of Ms. de Castro and did not sign hers.
"As to the charge of insubordination, it may be conceded, albeit unclear,
that complainant failed 'to place some corrections/additional remarks in the
Statement of Billings Adjustments' as instructed. However, under the
circumstances obtaining, where complainant strongly felt that she was being
discriminated against by her superior in relation to other employees, we are of the
considered view and so hold, that a reprimand would have su ced for the
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 infraction, but certainly not termination from services. 2 0

As this Court has ruled:

". . . where a penalty less punitive would su ce, whatever missteps may be
committed by labor ought not to be visited with a consequence so severe. It is not
only because of the law's concern for the workingman. There is, in addition, his
family to consider. Unemployment brings untold hardships and sorrows on those
dependent on the wage-earner." 2 1

Of course, in justifying Credo's termination of employment, NASECO claims as

additional lawful causes for dismissal Credo's previous and repeated acts of
insubordination, discourtesy and sarcasm towards her superior o cers, alleged to
have been committed from 1980 to July 1983. 2 2
If such acts of misconduct were indeed committed by Credo, they are deemed to
have been condoned by NASECO. For instance, sometime in 1980, when Credo
allegedly "reacted in a scandalous manner and raised her voice" in a discussion with
NASECO's Acting head of the Personnel Administration, 2 3 no disciplinary measure was
taken or meted against her. Nor was she even reprimanded when she allegedly talked
"in a shouting or yelling manner with the Acting Manager of NASECO's Building
Maintenance and Services Department in 1980, 2 4 or when she allegedly "shouted" at
NASECO's Corporate Auditor "in front of his subordinates displaying arrogance and
unruly behavior" in 1980, or when she allegedly shouted at NASECO's Internal Control
Consultant in 1981. 2 5 But then, in sharp contrast to NASECO's penchant for ignoring
the aforesaid acts of misconduct, when Credo committed frequent tardiness in August
and September 1983, she was reprimanded. 2 6
Even if the allegations of improper conduct (discourtesy to superiors) were
satisfactorily proven, NASECO's condonation thereof is gleaned from the fact that on 4
October 1983, Credo was given a salary adjustment for having performed in the job "at
least [satisfactorily]," 2 7 and she was then rated "Very Satisfactory" 2 8 as regards job
performance, particularly in terms of quality of work, quantity of work, dependability,
cooperation, resourcefulness and attendance.
Considering that the acts or omissions for which Credo's employment was
sought to be legally terminated were insu ciently proved, as to justify dismissal,
reinstatement is proper For "absent the reason which gave rise to [the employee's]
separation from employment, there is no intention on the part of the employer to
dismiss the employee concerned." 2 9 And, as a result of having been wrongfully
dismissed, Credo is entitled to three (3) years of backwages without deduction and
qualification. 3 0
However, while Credo's dismissal was effected without procedural fairness, an
award of exemplary damages in her favor can only be justi ed if her dismissal was
effected in a wanton, fraudulent, oppressive or malevolent manner. 3 1 A judicious
examination of the record manifests no such conduct on the part of management.
However, in view of the attendant circumstances in the case, i.e., lack of due process in
effecting her dismissal, it is reasonable to award her moral damages. And, for having
been compelled to litigate because of the unlawful actuations of NASECO, a reasonable
award for attorney's fees in her favor is in order.
In NASECO's comment 3 2 in G.R. No. 70295, it is belatedly argued that the NLRC
has no jurisdiction to order Credo's reinstatement. NASECO claims that, as a
government corporation (by virtue of its being a subsidiary of the National Investment
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 and Development Corporation (NIDC), a subsidiary wholly owned by the Philippine
National Bank (PNB), which in turn is a government owned corporation), the terms and
conditions of employment of its employees are governed by the Civil Service Law, rules
and regulations. In support of this argument, NASECO cites National Housing
Corporation vs. Juco, 3 3 where this Court held that "There should no longer be any
question at this time that employees of government-owned or controlled corporations
are governed by the civil service law and civil service rules and regulations."
It would appear that, in the interest of justice, the holding in said case should not
be given retroactive effect, that is, to cases that arose before its promulgation on 17
January 1985. To do otherwise would be oppressive to Credo and other employees
similarly situated, because under the same 1973 Constitution but prior to the ruling in
National Housing Corporation vs. Juco, this Court had recognized the applicability of
the Labor Code to, and the authority of the NLRC to exercise jurisdiction over, disputes
involving terms and conditions of employment in government-owned or controlled
corporations, among them, the National Service Corporation (NASECO). 3 4
Furthermore, in the matter of coverage by the civil service of government-owned
or controlled corporations, the 1987 Constitution starkly varies from the 1973
Constitution, upon which National Housing Corporation vs. Juco is based. Under the
1973 Constitution, it was provided that:
"The civil service embraces every branch, agency, subdivision, and
instrumentality of the Government, including every government-owned or
controlled corporation . . ." 3 5

On the other hand, the 1987 Constitution provides that:

"The civil service embraces all branches, subdivisions, instrumentalities,
and agencies of the Government, including government-owned or controlled
corporations with original charter." 3 6 (Emphasis supplied)

Thus, the situations sought to be avoided by the 1973 Constitution and

expressed by the Court in the National Housing Corporation case in the following
manner —
"The in rmity of the respondents' position lies in its permitting a
circumvention or emasculation of Section 1, Article XII-B of the Constitution. It
would be possible for a regular ministry of government to create a host of
subsidiary corporations under the Corporation Code funded by a willing
legislature. A government-owned corporation could create several subsidiary
corporations. These subsidiary corporations would enjoy the best of two worlds.
Their o cials and employees would be privileged individuals, free from the strict
accountability required by the Civil Service Decree and the regulations of the
Commission on Audit. Their incomes would not be subject to the competitive
restrains of the open market nor to the terms and conditions of civil service
employment. Conceivably, all government-owned or controlled corporations could
be created, no longer by special charters, but through incorporations under the
general law. The Constitutional amendment including such corporations in the
embrace of the civil service would cease to have application. Certainly, such a
situation cannot be allowed to exist." 3 7

appear relegated to relative insigni cance by the 1987 Constitutional provision that the
Civil Service embraces government-owned or controlled corporations with original
charter; and, therefore, by clear implication, the Civil Service does not include
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 government-owned or controlled corporations which are organized as subsidiaries of
government-owned or controlled corporations under the general corporation law.
The proceedings in the 1986 Constitutional Commission also shed light on the
Constitutional intent and meaning in the use of the phrase "with original charter." Thus
"THE PRESIDING OFFICER (Mr. Trenas) Commissioner Romulo is
recognized.
MR. ROMULO. I beg the indulgence of the Committee. I was reading the
wrong provision.
I refer to Section 1, subparagraph 1 which reads:
The Civil Service embraces all branches, subdivisions,
instrumentalities, and agencies of the government, including government-
owned or controlled corporations.
My query: Is Philippine Airlines covered by this provision?
MR. FOZ. Will the Commissioner please state his previous question?
MR. ROMULO. The phrase on line 4 of Section 1, subparagraph 1, under
the Civil Service Commission, says: "including government-owned or controlled
corporations." Does that include a corporation, like the Philippine Airlines which is
government-owned or controlled?

MR. FOZ. I would like to throw a question to the Commissioner. Is the

Philippine Airlines controlled by the government in the sense that the majority of
stocks are owned by the government?
MR. ROMULO. It is owned by the GSIS. So, this is what we might call a
tertiary corporation. The GSIS is owned by the government. Would this be covered
because the provision says "including government-owned or controlled
corporations."

MR. FOZ. The Philippine Airlines was established as a private corporation.

Later on, the government, through the GSIS, acquired the controlling stocks. Is
that not the correct situation?
MR. ROMULO. That is true as Commissioner Ople is about to explain.
There was apparently a Supreme Court decision that destroyed that distinction
between a government-owned corporation created under the Corporation Law and
a government-owned corporation created by its own charter.

MR. FOZ. Yes, we recall the Supreme Court decision in the case of NHA vs.
Juco to the effect that all government corporations irrespective of the manner of
creation, whether by special charter or by the private Corporation Law, are deemed
to be covered by the civil service because of the wide-embracing de nition made
in this section of the existing 1973 Constitution. But we recall the response to the
question of Commissioner Ople that our intendment in this provision is just to
give a general description of the civil service. We are not here to make any
declaration as to whether employees of government-owned or controlled
corporations are barred from the operation of laws, such as the Labor Code of the
Philippines.
MR. ROMULO. Yes.

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 MR. OPLE. May I be recognized, Mr. Presiding O cer, since my name has
been mentioned by both sides.
MR. ROMULO. I yield part of my time.
THE PRESIDING OFFICER (Mr. Trenas). Commissioner Ople is recognized.
MR. OPLE. In connection with the coverage of the Civil Service Law in
Section 1(1), may I volunteer some information that may be helpful both to the
interpellator and to the Committee. Following the proclamation of martial law on
September 21, 1972, this issue of the coverage of the Labor Code of the
Philippines and of the Civil Service Law almost immediately arose. I am, in
particular, referring to the period following the coming into force and effect of the
Constitution of 1973, where the Article on the Civil Service was supposed to take
immediate force and effect. In the case of LUZTEVECO, there was a strike at the
time. This was a government-controlled and government-owned corporation. I
think it was owned by the PNOC with just the minuscule private shares left. So,
the Secretary of Justice at that time, Secretary Abad Santos, and myself sat
down, and the result of that meeting was an opinion of the Secretary of Justice —
which became binding immediately on the government — that government
corporations with original charters, such as the GSIS, were covered by the Civil
Service Law and corporations spun off from the GSIS, which we called second
generation corporations functioning as private subsidiaries, were covered by the
Labor Code. Samples of such second generation corporations were the Philippine
Airlines, the Manila Hotel and the Hyatt. And that demarcation worked very well. In
fact, all of these companies I have mentioned as examples, except for the Manila
Hotel, had collective bargaining agreements. In the Philippine Airlines, there were,
in fact, three collective bargaining agreements; one, for the ground people or the
PALIA; one, for the ight attendants or the PASAC; and one for the pilots of the
ALPAC. How then could a corporation like that be covered by the Civil Service
law? But, as the Chairman of the Committee pointed out, the Supreme Court
decision in the case of NHA vs. Juco unrobed the whole thing. Accordingly, the
Philippine Airlines, the Manila Hotel and the Hyatt are now considered under that
decision covered by the Civil Service Law. I also recall that in the emergency
meeting of the Cabinet convened for this purpose at the initiative of the Chairman
of the Reorganization Commission, Armand Fabella, they agreed to allow the
CBAs to lapse before applying the full force and effect of the Supreme Court
decision. So, we were in the awkward situation when the new government took
over. I can agree with Commissioner Romulo when he said that this is a problem
which I am not exactly sure we should address in the deliberations on the Civil
Service Law or whether we should be content with what the Chairman said — that
Section 1 (1) of the Article on the Civil Service is just a general description of the
coverage of the Civil Service and no more.
Thank you, Mr. Presiding Officer.
MR. ROMULO. Mr. Presiding O cer, for the moment, I would be satis ed if
the Committee puts on records that it is not their intent by this provision and the
phrase "including government-owned or controlled corporations" to cover such
companies as the Philippine Airlines.
MR. FOZ. Personally, that is my view. As a matter of fact, when this draft
was made, my proposal was really to eliminate, to drop from the provision, the
phrase "including government-owned or controlled corporations."
MR. ROMULO. Would the Committee indicate that that is the intent of this
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 provision?
MR. MONSOD. Mr. Presiding O cer, I do not think the Committee can
make such a statement in the face of an absolute exclusion of government-
owned or controlled corporations. However, this does not preclude the Civil
Service Law to prescribe different rules and procedures, including emoluments for
employees of proprietary corporations, taking into consideration the nature of
their operations. So, it is a general coverage but it does not preclude a distinction
of the rules between the two types of enterprises.

MR. FOZ. In other words, it is something that should be left to the

legislature to decide. As I said before, this is just a general description and we are
not making any declaration whatsoever.
MR. MONSOD. Perhaps if Commissioner Romulo would like a de nitive
understanding of the coverage and the Gentleman wants to exclude government-
owned or controlled corporations like Philippine Airlines, then the recourse is to
offer an amendment as to the coverage, if the Commissioner does not accept the
explanation that there could be a distinction of the rules, including salaries and
emoluments.
MR. ROMULO. So as not to delay the proceedings, I will reserve my right to
submit such an amendment.
xxx xxx xxx
THE PRESIDING OFFICE (Mr. Trenas) Commissioner Romulo is recognized.
MR. ROMULO. On page 2, line 5, I suggest the following amendment after
"corporations": Add a comma (,) and the phrase EXCEPT THOSE EXERCISING
PROPRIETARY FUNCTIONS.

THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?
SUSPENSION OF SESSION

MR. MONSOD. May we have a suspension of the session?

THE PRESIDING OFFICER (Mr. Trenas). The session is suspended.
It was 7:16 p.m.
RESUMPTION OF SESSION

At 7:21 p.m., the session was resumed.

THE PRESIDING OFFICER (Mr. Trenas). The session is resumed.
Commissioner Romulo is recognized.
MR. ROMULO. Mr. Presiding O cer, I am amending my original proposed
amendment to now read as follows: "including government-owned or controlled
corporations WITH ORIGINAL CHARTERS." The purpose of this amendment is to
indicate that government corporations such as the GSIS and SSS, which have
original charters, fall within the ambit of the civil service. However, corporations
which are subsidiaries of these chartered agencies such as the Philippine Airlines,
Manila Hotel and Hyatt are excluded from the coverage of the civil service.
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 THE PRESIDING OFFICER (Mr. Trenas). What does the Committee say?
MR. FOZ. Just one question, Mr. Presiding O cer. By the term "original
charters," what exactly do we mean?

MR. ROMULO. We mean that they were created by law, by an act of

Congress, or by special law.

MR. FOZ. And not under the general corporation law.

MR. ROMULO. That is correct. Mr. Presiding Officer.
MR. FOZ. With that understanding and clarification, the Committee accepts
the amendment.
MR. NATIVIDAD. Mr. Presiding O cer, so those created by the general
corporation law are out.
MR. ROMULO. That is correct." 3 8

On the premise that it is the 1987 Constitution that governs the instant case
because it is the Constitution in place at the time of decision thereof, the NLRC has
jurisdiction to accord relief to the parties. As an admitted subsidiary of the NIDC, in turn
a subsidiary of the PNB, the NASECO is a government-owned or controlled corporation
without original charter.
Dr. Jorge Bocobo, in his Cult of Legalism, cited by Mr. Justice Perfecto in his
concurring opinion in Gomez vs. Government Insurance Board (L-602, March 31, 1947,
44 O. G. No. 8, pp. 2687, 2694; also published in 78 Phil. 221) on the effectivity of the
principle of social justice embodied in the 1935 Constitution, said:
"Certainly, this principle of social justice in our Constitution as generously
conceived and so tersely phrased, was not included in the fundamental law as a
mere popular gesture. It was meant to (be) a vital, articulate, compelling principle
of public policy. It should be observed in the interpretation not only of future
legislation, but also of all laws already existing on November 15, 1935. It was
intended to change the spirit of our laws, present and future. Thus, all the laws
which on the great historic event when the Commonwealth of the Philippines was
born, were susceptible of two interpretations — strict or liberal, against or in favor
of social justice, now have to be construed broadly in order to promote and
achieve social justice. This may seem novel to our friends, the advocates of
legalism, but it is the only way to give life and signi cance to the above-quoted
principle of the Constitution. If it was not designed to apply to these existing laws,
then it would be necessary to wait for generations until all our codes and all our
statutes shall have been completely changed by removing every provision
inimical to social justice, before the policy of social justice can become really
effective. That would be an absurd conclusion. It is more reasonable to hold that
this constitutional principle applies to all legislation in force on November 15,
1935, and all laws thereafter passed."

WHEREFORE, in view of the foregoing, the challenged decision of the NLRC is

AFFIRMED with modi cations. Petitioners in G.R. No. 69870, who are the private
respondents in G.R. No. 70295, are ordered to: 1) reinstate Eugenia C. Credo to her
former position at the time of her termination, or if such reinstatement is not possible,
to place her in a substantially equivalent position, with three (3) years backwages, from
1 December 1983, without quali cation or deduction, and without loss of seniority
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 rights and other privileges appertaining thereto, and 2) pay Eugenia C. Credo P5,000.00
for moral damages and P5,000.00 for attorney's fees.
If reinstatement in any event is no longer possible because of supervening
events, petitioners in G.R. No. 69870, who are the private respondents in G.R. No. 70295
are ordered to pay Eugenia C. Credo, in addition to her backwages and damages as
above described, separation pay equivalent to one-half month's salary for every year of
service, to be computed on her monthly salary at the time of her termination on 1
December 1983.
SO ORDERED.
Fernan, C.J., Melencio-Herrera, Paras, Feliciano, Gancayco, Bidin, Sarmiento,
Cortes, Griño-Aquino, Medialdea and Regalado, JJ., concur.
Narvasa, J., is on leave.
Gutierrez, Jr., J., concurs in the result.
Cruz, J., see separate concurrence.

Separate Opinions
CRUZ, J., concurring :

While concurring with Mr. Justice Padilla's well-researched ponencia, I have to

express once again my disappointment over still another avoidable ambiguity in the
1987 Constitution.
It is clear now from the debates of the Constitutional Commission that the
government-owned or controlled corporations included in the Civil Service are those
with legislative charters. Excluded are its subsidiaries organized under the Corporation
Code.
If that was the intention, the logical thing, I should imagine, would have been to
simply say so. This would have avoided the suggestion that there are corporations with
duplicate charters as distinguished from those with original charters.
All charters are original regardless of source unless they are amended. That is
the acceptable distinction. Under the provision, however, the charter is still and always
original even if amended as long it was granted by the legislature.
It would have been clearer, I think, to say "including government owned or
controlled corporations with legislative charters." Why this thought did not occur to the
Constitutional Commission places one — again — in needless puzzlement.

Footnotes
* Signed by Guillermo C. Medina, Presiding Commissioner, Gabriel M. Gatchalian and Miguel B.
Varela, Commissioners; the last one concurring in the result.

1. Rollo (G.R. No. 69870), p. 122.

2. Ibid., p. 123.

3. Ibid.
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 4. Ibid., p. 22.
5. Ibid., p. 62.

6. Ibid., p. 63.
7. Ibid.

8. Ibid., p. 66.

9. Ibid., p. 65.
10. Ibid., p. 25.

11. Ibid., p. 104.

12. Ibid., p. 126.

13. Ibid., p. 148.

14. Ibid., p. 8.
15. Ibid.

16. Rollo. (G.R. No. 70295), p. 8.

17. Rule XIV, Book V, Implementing Rules and Regulations.

18. Constitution (1973), Art. II, Sec. 9; Constitution (1987), Art. II, Sec. 18; Labor Code, Art. III.

19. Rollo, (G.R. No. 69870), p. 57-59.

20. Ibid., p. 125.

21. Almira vs. B.F. Goodrich Philippine, Inc., 58 SCRA 120.

22. Rollo, (G.R. No. 69870), p. 2-5.

23. Ibid, p. 13.

24. Ibid.
25. Ibid.

26. Ibid.

27. Ibid., p. 91.

28. Ibid, p. 78.

29. Pepito vs. Secretary of Labor, 98 SCRA 454.

30. Ibid.

31. Civil Code, Art. 2232.

32. Rollo (G.R. No. 70295), p. 125.

33. 134 SCRA 172.

34. Philippine Air Line, Inc. vs. NLRC, 124 SCRA 583; Philippine Air Lines, Inc. vs. NLRC, 126
SCRA 223 and National Service Corporation vs. Leogardo, Jr., 130 SCRA 502.

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 35. Constitution, 1973, Art. II-B, Sec. I(1).

36. Constitution (1987), Art. IX-B, Sec. 2(1).

37. 134 SCRA 182-183.

38. Record of the Constitutional Commission, Vol. I, pp. 583-585.

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